The Constitution gives Congress power to coin money and regulate the value of money. Does the Constitution define money? No, so Congress gets to write its own definition, just as it gets to define income for income tax purposes. Money can be any medium of exchange used for commercial transactions, to include intangible media. With the power to regulate money, Congress can simply declare bitcoins worthless or counterfeit. Congress can declare the mining of bitcoins an economic activity and tax the production of bitcoins as income, and arbitrarily assign a dollar value to each bitcoin mined in th U.S. That same dollar value would be ascribed to any purchases and sales denminated in bitcoins for purposes of gains on transactions.

Congress can make the economic costs of complying with regulations for bitcoin mining so onerous as to make it unprofitable. You underestimate the flexibility Congress has under the Constitution. They don't have to make something illegal to make it unprofitable.

quote:Go to a bitcoin exchange, such at MtGox, and purchase bitcoins with dollars from your bank account

Okay, so if I do that then what evidence do I have that I have bitcoins? Does that website set up some type of "account" (I put it in parentheses because you said earlier no one has a bitcoin account but I don't know what the proper word would be) which I would then use to purchase from?

quote:get on reddit/girlsgonebitcoin and show your body in exchange for bitcoins

also the effect of bitcoin, even in it's current state, especially in it's current state, appears to me to be extremely likely to end up totally changing the real world applicability of the international finance trilemma. Recently more economists, especially kenyesians, have been advocating more widespread use of capital controls in developing countries(it's usually far too cost prohibitive to be worth pursuing in developed countries), but as soon as bitcoin becomes widespread enough, this will basically become an exercise in futility, and there will no longer even be a "trilemma" - countries will only be able to simply choose a fixed or floating exchange rate.

to put the significance of this in layman's terms: china has been keep it's currency undervalued for years in order to make it's exports cheaper relative to other countries domestic goods and cause them to buy more chinese exports. it does this by restricting the amount of yuan it's citizens can exchange for other currencies, keeping the supply of yuan artificially high. if bitcoin proliferation were to cause the yuan to appreciate 10%, then all the shite we import from china would immediately become 10% more expensive (think iphones). considering a lot of people estimate the yuan could be undervalued by as much as 30%, that is enormously significant exogenous shock to the us economy. of course, it would take years and years for bitcoin proliferation to take effect, and this is china were talking about, so i really wouldnt put any amount of ruthlessness past them to try to prevent such a thing from occurring.

quote:An internal FBI report in April expressed concern over the online currency. The report was leaked to Wired and Betabeat. “Since Bitcoin does not have a centralized authority, law enforcement faces difficulties detecting suspicious activity, identifying users, and obtaining transaction records—problems that might attract malicious actors to Bitcoin,” says the report. For now, Iranians are using bitcoins to maintain a fragile connection to the outside world.

Can you try again and dumb it down a bunch so that I can understand it? Thanks.

When you load up bitcoin software (there are multiple options out there, it's not just one), a "wallet" is generated. This is simply a long string of numbers and letters. It is stored in a file on your computer. You can move it to other places. You can encrypt it and lock it away. You can print it out and put it in a physical safe and then delete the file. Etc. etc.

You need to know that string of numbers in order to transact any of the bitcoins controlled by that key.

quote:if americans simply dont care much what the government has to do to figure out how to stop these people, then there are numerous options the gov can pursue to bend the rules a little to make it easier to find these people. and because people likely wont care, they'll be able to pursue more invasive, less constitutional, but faster and cheaper strategies, and the amount of time and resources needed will be substantially lower than otherwise

well that sounds awesome

quote: Large companies like amazon will likely never accept them due to it's negative social stigma, i mean imagine if they did. the media is constantly desperate for a new crusade against big business, and one of the biggest ones decides to start accepting money that for all they know could have just been directly generated from child prostitution or human trafficking

same applies with any currency

if americans accept paypal, they'll just see bitcoin as a paypal-like system

quote: If a ton of things go right, in the very distant future i could realistically see it becoming something similar to(or at least an easier way to think of it) a sort of internationally accepted, digitally transacted, precious metal.

that is what it is right now, basically.

the lack of manipulation you spoke of earlier is real, but that's kind of the point of bitcoin

quote:they think a bunch of computer programmers found a way to undermine every central bank in the world.

well, like you said, this is just the first

human history has shown that mankind is fully willing to do what it has to do to transact business in spite of government. iran is just one example.

the US federal government has bastardized our currency into a tool for tracking and policing the populace. our federal government is leading the country to financial ruin. people will develop ways around both systems/problems.

and this isn't some conspiracy theory/whacko thing. states and the feds are cracking down on people using cash. legal, government-backed cash.

quote:Why is the US government afraid of currency competition? That should be the key question.

i don't think it's "competition"

1. governments hate anonymity, especially in financial transactions. there are a bunch of reasons for this. but like i said earlier, US-backed cash is even scary not to various government actors. that's crazy shite.

2. government actors do feel that through regulating society, they're protecting society. it's not an evil thing...they honestly think they know best. currencies are scary to politicians b/c they think they're a way to manipulate or take advantage of people

Can you try again and dumb it down a bunch so that I can understand it? Thanks.

it's too much for me, at the moment, too

but, let's just assume that independent/online currency/trade tools emerge down the road and become popular. this is a pure hypothetical world and it may not ever come about

in that world, you will see businesses emerge to facilitate these actions in a secure, likely insured at some point, manner. we will call these benks (for e-bank). for some sort of a fee, they'll create interfaces and storage options for the market. they'll be like swiss banks in reality